Friday’s bond market has opened in negative territory despite somewhat favorable inflation news. Stocks are mixed with the Dow down 110 points and the Nasdaq up 124 points. The bond market is currently down 6/32 (4.30%), but a nice rally midday yesterday should allow this morning’s mortgage rates to be approximately .125 of a discount point lower than Thursday’s early pricing. The actual size of this morning’s improvement depends on how much of an intraday revision you got yesterday.

Yesterday’s 30-year Treasury Bond auction went better than Wednesday’s 10-year Note sale, but still wasn’t an overly strong auction. The benchmarks point to an above average demand for the securities when compared to other recent sales. Bonds had already improved from morning levels by the time results were announced at 1:00 PM ET due to Middle East headlines. However, the slight positive reaction to the auction results looked to be enough for many lenders to issue an intraday improvement in rates. While the auction wasn’t the primary reason for the improvement in rates, it did contribute to the timing of the move.

This morning’s key economic news came from March's Consumer Price Index (CPI) that was released at 8:30 AM ET. It revealed consumer level inflation spiked last month as result of the Iran war and high oil/gas prices. The overall CPI rose 0.9% in March to match what analysts were expecting. However, the more important core reading that excludes more volatile food and energy costs was up 0.2% when forecasts had it up 0.3%. The annual CPI readings showed similar results with the overall reading matching expectations of a 3.3% pace and the core reading standing at 2.6%, down slightly from February’s 2.7%. Most predictions had the year-over-year core reading holding at February’s level. Since the core readings came below forecasts, we can label the report good news for bonds and mortgage rates.

February's Factory Orders report showed no change from January’s orders, hinting at flat manufacturing activity. It was expected to reveal a 0.2% decline in new orders for both durable and non-durable goods. Since the report did not indicate orders dropped as it was expected to do, we have to label it unfavorable for bonds and mortgage rates. However, this report doesn’t carry a high level of importance in the markets, so we have not seen much reaction to the release.

Another piece of good news for rates was the unexpected decline in the University of Michigan's April Index of Consumer Sentiment that was posted at 10:00 AM ET. They announced a reading of 47.6 that was well below forecasts of 52.0 and a larger decline from Match’s 53.3. The large decline means surveyed consumers were far less optimistic about their own financial situations than many had thought and are likely to spend less in the immediate future. This is good news for bonds and mortgage rates because consumer spending makes up a huge part of the U.S. economy and bonds tend to thrive in weaker economic conditions.

Next week has a handful of economic reports that we will be watching, but only one of them is considered to be highly influential. Most of the data is known to be moderately important, meaning its impact on mortgage rates is usually minor. We will also be following headlines and progress of peace talks from the Middle East. The week starts Monday with March’s Existing Home Sales report that will tell us how the housing sector is doing. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.